29 August 2015

Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again


"I believe myriad global “carry trades” – speculative leveraging of securities – are the unappreciated prevailing source of finance behind interlinked global securities market Bubbles. They amount to this cycle’s government-directed finance unleashed to jump-start a global reflationary cycle.

I’m convinced that perhaps Trillions worth of speculative leverage have accumulated throughout global currency and securities markets at least partially based on the perception that policymakers condone this leverage as integral (as mortgage finance was previously) in the fight against mounting global deflationary forces."

Doug Noland, Carry Trades and Trend-Following Strategies

The basic diagnosis is correct.   But the nature of the disease, and the appropriate remedies, may not be so easily apprehended, except through simple common sense.  And that is a rare commodity these days.

Like a dog returns to its vomit, the Fed's speculative bubble policy enables the one percent to once again feast on the carcass of the real economy.

'And no one could have ever seen it coming.'

Once is an accident.

Twice is no coincidence.

Remind yourself what has changed since then.  Banks have gotten bigger.   Schemes and fraud continue.

What will the third time be like?  And the fourth?

Do you think that Jamie bet Lloyd a dollar that they couldn't do it again?

Should we ask them to please behave, levy some token fines, watch the politicans yell and posture in some toothless public hearings, let all of them keep their jobs and their bonuses?   And then bail them out, wind up the old Victrola,  and have another go at the same old thing again?

Maybe we can vote for one of their hired servants, or skip the middlemen and vote for one of the arrogant hustlers themselves, and hope they get tired of taking us for a ride before we all go broke.

This policy we have now is the trickle down stimulus that the wealthy financiers have been sucking on with every opportunity that they have made for themselves since the days of Andrew Jackson. Whenever the ability to create and distribute money has been handed over by a craven Congress to private corporations and banking cartels without sufficient oversight and regulation, excessive speculation, financial recklessness, and moral hazard have acted like a plague of misery and stagnation on the real economy.

"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the Bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank.

You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."

From the original minutes of the Philadelphia bankers sent to meet with President Jackson February 1834, from Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

I believe all of the above is entirely possible.  Because we still have an unashamed cadre of quack economists and their ideologically blind followers blaming the victims,  prescribing harsh punishments for the weak, laying all the blame on 'government' and not corrupt officials on the payrolls of Big Money, and giving the gods of the market and their masters of the universe a big kiss on the head, and expecting them to just do the right thing the next time out of the natural goodness of their unrestrained natures the next time.  What could go wrong with that?

Genuine reform.   It's too much work, and too much trouble.


Related:  Comprehensive Tally of Banker Fraud

h/t Jesse Felder for the chart





Gold Seasonality And Average Intraday Price Movement


It will be interesting to see how gold moves in the latter half of this year.

As for the intraday movement, the impact of the London - New York on the gold trade is hard to miss.

It might not be too glib to say that the Anglo-Americans are sellling, and the rest of the world is buying overnight.

I certainly hope that this sort of long term price manipulation does not catch up to them on the supply side.








28 August 2015

Recent Trends in the Premium For Silver Coins Versus Spot Silver


"One important aspect of the physical market that is often overlooked is the premium it commands over spot price. Right before the Global Financial Crisis in 2008, the spot Silver price fell as low as USD 9 per oz., whereas the price of a 1 oz. Silver Eagle was around USD 17 on the wholesale market and even higher on the retail market! That’s a price premium of 188%!

That means that if you had held 100 oz. of paper Silver, you might have had to liquidate that for USD 900 (assuming the market was not halted for trading then), whereas if you had held 100 pieces of 1 oz. Silver Eagle coins, you would have gotten at least USD 1700 for them if not more."

BullionStar, The Difference in Paper and Physical Gold and Silver in times of Crisis


For the charts below the price data is the 'Ask'  live price from a major online supplier.

As always, if it is data related to the gold and silver markets and it is publicly available, Nick Laird at goldchartsrus.com is probably keeping track of it.